Sen. Elizabeth Warren (D-Mass.) said on Sunday she’s worried the Federal Reserve will “tip this economy into recession” after Chair Jerome Powell vowed to hike up interest rates in an effort to combat inflation.
On Friday, Powell gave a speech at the Fed’s annual economic symposium about his plan to fight the runaway price increases that have impacted Americans despite unemployment falling to a half-century low. The chairman said that additional sharp interest rate hikes will likely cause pain for Americans, but that these are the “unfortunate costs” of reducing inflation.
“I just want to translate what Jerome Powell just said,” Warren told Dana Bash on CNN’s “State of the Union.” “What he calls ‘some pain’ means putting people out of work, shutting down small businesses, because the cost of money goes up because the interest rates go up.”
Since March, the Fed has implemented its fastest pace of rate increases in decades to try and curb inflation, which has resulted in soaring costs for food, gas, rent and other necessities. The rate hikes have led to higher costs for mortgages, car loans and other borrowing ― leading to plunging home sales.
The soaring inflation has also made the economy a risky topic for Democrats to campaign on ahead of the November elections, with Republicans denouncing President Joe Biden’s $1.9 trillion financial support package as having fueled inflation.
Powell said that the size of the Fed’s next rate increase ― which will occur at its next meeting in late September ― will depend on inflation and jobs data. The increase could be between one-half or three-quarters of a percentage point, either of which would exceed the Fed’s traditional quarter-point hike.
Warren said that there is “nothing in raising the interest rates, nothing in Jerome Powell’s tool bag that deals directly with” the actual causes of inflation, of which she pointed to COVID-19, supply chain issues, the war between Russia and Ukraine, and price-gouging by large corporations.
“And he has admitted as much in congressional hearings when I have asked him about it,” the senator continued. “Do you know what’s worse than high prices and a strong economy? It is high prices and millions of people out of work. I’m very worried that the Fed is going to tip this economy into recession.”
This article originally appeared on HuffPost and has been updated.